Private cloud provides long-term savings, despite high upfront costs

Friday, July 13, 2012 - 7:28am

The hype surrounding cloud services has been steadily increasing as organizations around the world become more aware of the technology and how leveraging it can boost operational performance. Initially, companies were interested in the public cloud, as the opportunity to outsource IT processes offered significant cost savings. However, the public cloud also introduced new security threats that decision-makers were not entirely prepared to deal with and, as a result, they began to look to the private cloud for greater protection.

Hosting mission-critical applications and data on-site proved to be much safer, as IT departments could have greater visibility into the network and deploy more robust security tools to ensure the protection of sensitive solutions. Despite the large initial investment, businesses have realized the premise-based clouds still offer significant long-term cost savings, according to a report by Sourcing Focus.

"If you have significant demand, the owned private option can result in overall cost savings," enterprise cloud expert Ephraim Baron said, according to Sourcing Focus. "If your load varies widely a capacity-on-demand approach will likely make more sense."

These findings were echoed in a recent study by IDG Enterprise, which revealed that approximately 63 percent of companies believe they will experience cost reductions in the long term, despite rather high short-term spending. As a result, nearly two-thirds of companies will increase their cloud budgets in the next year.

Survey respondents also said the private cloud is where they host the majority of their data - a trend that will continue during the coming year, IDG Enterprise noted.

As more businesses prepare for the advent of big data, Sourcing Focus said decision-makers will continue to look to the private cloud for answers in regard to storage and availability of sensitive information.